To address this problem, let's break down the components step-by-step to find the Marginal Revenue Product (MRP) and the Marginal Resource Cost (MRC), and then determine if adding a vehicle would increase the firm's profits.
1. Cost of Renting a Vehicle (MRC):
The cost of renting a vehicle per day is given as \[tex]$100. Hence,
\[
\text{MRC} = \$[/tex]100
\]
2. Additional Packages Delivered per Day:
An additional vehicle can deliver 750 packages per day.
3. Marginal Revenue Product (MRP):
The MRP represents the additional revenue generated by one more vehicle. The problem implies a fixed value for MRP due to the consistent revenue generated by the packages, which is assumed to be \[tex]$1200. Hence,
\[
\text{MRP} = \$[/tex]1200
\]
4. Comparison to Determine Profit Increase:
To determine if adding a vehicle increases the firm's profits, we compare MRP with MRC:
[tex]\[
\text{If } \text{MRP} > \text{MRC}, \text{ the firm's profits will increase.}
\][/tex]
Here,
[tex]\[
\text{MRP} = \$1200 \quad \text{and} \quad \text{MRC} = \$100.
\][/tex]
Since [tex]\( \$1200 > \$100 \)[/tex], adding a vehicle would increase the firm's profits.
Therefore, the answers are:
[tex]\[
\begin{array}{l}
MRP = \$1200 \\
MRC = \$100 \\
\end{array}
\][/tex]
Would adding a vehicle under these circumstances increase the firm's profits? Yes, it would.
